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3 Lamplighter 1 (1991-1992)

handle is hein.journals/lmplgt3 and id is 1 raw text is: Problems in Apportionment of Military Pensions in State Divorce Actions THOMAS W. KELLY, TURNER C. SCOTT AND CHANTEE LEWIS For better or worse (or for richer or poorer), state courts around the coun- try are now routinely carving up vested and non-vested military pensions in di- vorce actions involving servicemem- bers.1 Whether for active duty personnel with less than twenty years' service or for fully vested retirees, most state courts confronted with the issue have ruled that military pensions are assets of the marital estate and sub- ject to the distribution power of the divorce courts.' This trend is readily apparent in the approximately twenty- six states that use equitable distribu- tion statutes, and is even better es- tablished in those western states that use the so-called community prop- erty approach to the apportionment of marital assets.3 Indeed, California (which always somehow seems to be different) now requires retirees to begin paying any court-ordered portion of the retirement to an ex-spouse even if the service- member elects to continue on active duty beyond the twentieth year.4 Thus, a retiree divorced in California can look forward to paying an ex-spouse a sig- nificant sum monthly as equitable dis- tribution even if he or she is still in uniform. The purpose of this article is to cri- tique the methodology and theory used in these awards and to suggest a patterned formula for equitable dis- tribution of military pensions that is fair to the servicemember, to divorced mil- itary spouses, and to future spouses. To illustrate the considerable eco- nomic consequences of the appor- tionment problem, the authors have developed hypotheticals with num- bers derived from the recent active duty and retired pay schedules that show the considerable impact of these pension distribution orders. Background The theory of equitable distribution used by the majority of states is that the marital association is conceptually analogous to a business partnership in which both spouses contribute their best efforts for the promotion of the common venture.5 Thus, upon dissolution, the same principles apply for the apportionment of partnership assets as in a business partnership, i.e., 50 percent to each partner, unless there is a strong coun- terveiling reason, such as marital mis- conduct or physical incapacity, which would justify a disproportionate split of the marital estate. Importantly, most state laws require that the trial court consider the contri- bution of a spouse as homemaker as part of the calculation of the contri- bution to the marital estate. Applying this rationale to the military pension situation, the state courts that have considered the question apply a rough formula which generally calls for the nonmilitary spouse to receive one- half of the pension, when it is paid, with the amount reduced to reflect the number of years that the pensioner was on active duty and unmarried. Thus, a spouse married 15 years to a servicemember divorced in the same year that he or she retired would re- ceive one-half of 15/20ths (or 37.5 percent) of the military pension. This process is theoretically em- braced and, perhaps, implicitly ap- proved by the provisions of the Uniformed Services Former Spouses' Protection Act6 in which Congress au- thorized the services To honor state court orders for payment of up to 50 percent of pensions directly to former spouses with over ten years of active duty during the marriage. The Evaluation of Military Pensions Another approach to the problem of pension apportionment, which is fraught with danger for the service- member, is to reduce the projected lifetime value of the pension to its cur- rent value by guesstimating life ex- pectancy from the vital statistics data published by the Department of La- bor, and then reducing the pension to its current value. For example, a white male lieutenant with nine years service, married throughout his active duty service, and divorcing at the age of 32 would be projected by the life expectancy tables to have a life ex- pectancy of 42.2 years. To arrive at a total number of years for retirement payments, an actuary would predict a future inflation rate and apply a so- (Continued on page 5) Problems in Apportionment of Military Pensions in State Divorce Actions 1 The LAMPlighter Says 2 Chief's Column ........ 3 Reaching Out to Help 4 Tax Consequences of Desert Storm ........ 5

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